On Seller Estimates and Buyer Returns

11 Pages Posted: 5 Jun 2008

See all articles by Alex Gershkov

Alex Gershkov

Hebrew University of Jerusalem

Flavio Toxvaerd

University of Cambridge - Faculty of Economics


This paper revisits recent empirical research on buyer credulity in arts auctions and auctions for assets in general. We show that elementary results in auction theory can fully account for some stylized facts on asset returns that have been held to suggest that sellers of assets can exploit buyers by providing biased estimates of asset values. We argue that, rather than showing that buyers are credulous, the existing evidence can serve as an indirect test of the rationality assumptions underlying auction theory.

Keywords: Auctions, Buyer credulity, Information disclosure, Seller manipulation

JEL Classification: D44, D82, G12, G14

Suggested Citation

Gershkov, Alex and Toxvaerd, Flavio, On Seller Estimates and Buyer Returns. CEPR Discussion Paper No. DP6503, Available at SSRN: https://ssrn.com/abstract=1140030

Alex Gershkov (Contact Author)

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem, Jerusalem 91905

HOME PAGE: http://pluto.huji.ac.il/~alexg/

Flavio Toxvaerd

University of Cambridge - Faculty of Economics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

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